Sunday 17 December 2017

Egypt to introduce stamp duty in May, targets 1-1.5 bln pounds in revenues

Egypt to introduce stamp duty in May, targets 1-1.5 bln pounds in revenues
(Reuters (Eng) 03/20/17)
Egypt to introduce stamp duty in May, targets 1-1.5 bln pounds in revenues

Egypt's new stamp duty on stock exchange transactions will come into effect in May and include for the first time a 0.3 percent levy for investors acquiring more than a third of a company's stocks, deputy finance minister Amr al-Munayer said.

Egypt's finance minister said last month the government planned to introduce a stamp duty of 0.125 percent on buyers and sellers of stocks, rising to 0.150 percent in the second year and 0.175 percent in the third.

But Munayer told Reuters on Monday the stamp duty would apply to a wider ranger of instruments and the higher duty would be imposed on mergers and acquisitions where more than 33 percent of a company was being sold.

"It will be imposed on all listed and unlisted papers whether they are shares or bonds or over the counter," he said.

The finance ministry is targeting revenues of 1-1.5 billion Egyptian pounds ($54.8 million-$82.2 million) in the first year of the new tax, he said in a telephone interview.

Egypt imposed a stamp duty on buyers and sellers in May 2013, collecting more than 350 million Egyptian pounds in revenues before the levy was replaced in July 2014 by a 10 percent capital gains tax.

The government suspended the capital gains tax in May 2015 for two years, under pressure from investors. They said it was discouraging business just as Egypt was struggling to recover from a plunge in confidence after a 2011 uprising and subsequent political upheaval.

The Higher Investment Council last year extended the suspension of capital gains tax until 2020 as part of efforts to draw investors back. Instead, Egypt plans to revive the stamp duty as part of an economic reform programme that helped it win a $12 billion three-year loan from the IMF.

Egypt won final approval for its IMF programme just days after the central bank took the historic step of floating the currency. Together, the moves unleashed a deluge of investment in the Egyptian stock market, which hit record highs.

The blue-chip index was roughly unchanged on Monday's news.

More than 270 companies are listed on the Egyptian stock exchange and more than 500,000 investors are registered to trade there. ($1 = 18.25 Egyptian pounds) (Additional reporting by Ehab Farouk; Writing by Lin Noueihed; Editing by Dominic Evans)

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